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Five Critical Facts to Know When Looking at Latin American Compliance Upgrades for 2016

by Steve Sprague, Vice President of Product Strategy, Invoiceware International

December 14, 2015

If your company deployed SAP ERP in Latin America, the one constant you have is change. And while many of us have spent countless hours upgrading our SAP systems to comply with new laws, 2016 legislation is already rolling in. The real cost of compliance across this ever-changing region is not initial installation but instead day-to-day support and change management. As you round out 2015, keep these five critical facts in mind as you start to prepare for next year.

1.       All ERP Systems Have Compliance Gaps

ERP systems focus on storing data, rather than the process of exchanging data and the workflows required to manage the day-to-day discrepancies. This means critical issues for Latin American compliance; for instance, PDF generation, government validations, printing, distribution, and collection are ignored and usually encapsulated in WRICEF requests to the SAP center of excellence. As you look at the cost of your solution strategy, take into account the costs of maintaining your ERP system gaps. 

2.       Customizations and Configurations Make OSS Note Applications More Complicated

Sometimes it is not as simple as it sounds. While there may be an OSS note available, poor configuration of the SAP system can make updates more difficult. Or worse: you haven’t kept up to speed with the most recent support packs. Remember, many companies run at a minimum N-1 upgrade strategy which means you always stay one support pack stack back from the latest release. Installing one OSS note could require another 200 and who knows what those will affect, especially if you have Z-programs and customizations.

3.       Regional Approach vs. Single Country Solutions

It was possible to have a single country solution when you just had to worry about Brazil, but 10 countries have either announced or are in the process of announcing legislation similar to Brazil for electronic invoicing and fiscal reporting. Many companies are acquiring disparate solutions that are increasing support issues and change management costs. I spoke with one customer who has 18 different solutions for billing, accounts payable, and specific country reporting requirements across nine countries. This doesn’t take into account updates for the SAP system that are needed to make all 18 solutions work, which will require more resources. If your SAP system is not compliant, then all you have done is forced data to be extracted and changed outside of the system and now the local reporting solution becomes the true system of record.

4.       Implement Contingency to Lower Support Costs and Operational Downtime

No matter the country or its individual requirements, having the right processes in place is key to ensuring that your operations run smoothly. Printer error? Problems with electronic transmissions? If your company doesn’t have built-in contingencies to secure the required documentation to ship, you risk delayed deliveries and missed deadlines. That’s why it’s important to team up with a compliance partner that understands the implications of electronic invoicing mandates on all of your operations — not just finance — to keep your business running smoothly.

5.       Your IT Decision Could Cost You Millions in Cash Flow

In Latin America, governments have imposed mandatory electronic invoicing and fiscal reporting for one reason: to collect value-added tax (VAT) and it has been a success. See for yourself the collection increases in both Brazil and Mexico, and take note: this is not from raising rates but rather from using automation to eliminate loop holes. Examples include:

  • Brazil Nota Fiscal allowed the government to collect about $58 Billion in a single tax year
  • Mexico SAT saw 34% increase in VAT collections (about $5 Billion) in 1H 2014 due to CFDI automation

So as you look to tackle new mandates in 2016 for Brazil, Mexico, Peru, Uruguay, Ecuador, and potentially Colombia, make sure you take a more strategic view into your upgrade strategy. Mistakes can mean millions in this region.


Steve Sprague is the Vice President of Product Strategy for Invoiceware International. He is responsible for both product management and e-Invoicing regulatory updates. Over the last 16 years, he has designed solutions for SAP ERP that deliver out-of-the-box compliance for Latin America and European Union e-invoicing and fiscal reporting requirements.



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